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Sunday, December 8, 2013

IDB to offload Given Imaging at market cap of $955 million to undisclosed buyer

Three subsidiaries in Nochi Dankner’s financially-troubled
IDB group have agreed to sell their stakes in high-tech firm Given Imaging to
an unnamed investor at a market value of $955 million.

Some analysts say the acquiring firm is Covidien Plc, an
Ireland-based medical-device maker that is traded on the New York Stock
Exchange at a market cap of $31 billion.

Given Imaging is best known for its PillCam, an ingestible
camera to help diagnose digestive ailments. The deal sees the Yokne’am-based
company’s stock sold at a 26% premium to its price on the Nasdaq and 75% to its
average price over the past 12 months. The company’s shares are also traded on
the Tel Aviv Stock Exchange.

IDB subsidiaries Discount Investment Corp., Elron Electronic
Industries and Rafael Development Corp. hold stakes in Given Imaging. The deal
will be brought before the boards of the three companies on Sunday, and is
subject to approval by Given Imaging shareholders.

The sale would inject much-needed cash into the IDB group -
$142 million for Discount Investment, $204 million for Elron and $80 million
for Rafael Development Corp.

The deal would be an achievement for Dankner, who associates
say rejected a bid in February for Given Imaging at $15 per share, half the
price for which the company would be sold in the current deal.

In other IDB developments, Dankner is pulling out all the
stops in his bid to retain control of the group as creditors vote on two proposals,
one involving Dankner and Ukrainian businessman Alexander Granovsky, another
involving Argentine businessman Eduardo Elsztain

On Friday, IDB Holding, the company at the top of the IDB
pyramid, filed a court request to defer the deadline for the vote from Sunday
to Monday, in part to let creditors change their vote. IDB Holding says this is
required due to what it claims is misleading information that could have swayed
the vote.

The higher price for Given Imaging might be explained by
developments including Japanese approval for its video-camera pill to diagnose
precancerous polyps. Also, the Japanese Health Ministry has agreed to subsidize
tests performed by the company’s PillCam Colon video pill to the tune of $840
per test. This process will begin in January.

Given Imaging also expects to win approval from the U.S.
Federal Drug Administration next year to sell PillCam Colon in the United
States.

On the sale of Given Imaging, Discount Investment is
expected to record a capital gain of $158 million, or 554 million shekels,
including its share in Elron’s profit on the sale. IDB Development, Discount
Investment’s parent company, would record a capital gain of 357 million
shekels, and IDB Holding would record a capital gain of 347 million shekels.

Given Imaging has not yet reported to the U.S. Security and
Exchange Commission on the deal, apparently because the transaction has not yet
been approved by Given Imaging’s board of directors and shareholders.

Like many companies, Covidien is based in Dublin to take
advantage of Irish tax benefits. It specializes in minimally-invasive surgical
instruments. A Given Imaging purchase would be its fourth acquisition of an
Israeli company in the past two years.

In March last year, Covidien bought SuperDimension, which
develops respiratory diagnostic medical instruments, for $350 million. A month
later it bought Oridion, which makes equipment that measures carbon dioxide
levels in a patient’s breath, for $346 million.

A more modest acquisition was the summer-of-2012
purchase of PolyTouch Medical, for what was thought to be about $20 million.
PolyTouch sells laporascopic surgical instruments that enable surgeons to
insert soft-tissue prosthetics for a variety